Brazil’s Unipar 2022 earnings fall sharply on higher costs, warns of more hardship ahead

Jonathan Lopez


SAO PAULO (ICIS)–Unipar’s earnings and net income fell sharply in 2022 despite an increase in sales on the back of higher costs for feedstocks, the Brazilian chemicals producer said this week.

The company’s earnings before interest, taxes, depreciation, and amortisation (EBITDA), the best metric to measure a company’s financial soundness, fell by nearly 16% to Brazilian reais (R) 3.16bn ($605m).

In the fourth quarter of 2022 alone, EBITDA fell by more than 56%, year on year.

The company’s stock was down more than 7% on Tuesday afternoon trading, compared with the prior close, to R75.30/share.

Unipar produces polyvinyl chloride (PVC), caustic soda, vinyl chloride monomer (VCM), ethylene dichloride (EDC) and other chlorine derivatives, among others; its three main production facilities are in Cubatao and Santo Andre, Brazil, and Bahia Blanca in Argentina.

(in ‘000 R)
Q4 2022 Q4 2021 Change 2022 2021 Change
Sales 1,435,972 2,019,356 -28.9% 7,270,406 6,289,369 15.6%
EBITDA 286,955 1,152,368 -56.1% 2,627,554 3,163,842 -17.0%
Net income 148,330 687,996 -25.0% 1,334,303 2,003,833 -33.4%

Capacity utilisation during 2022 rose, year on year, to 84%, said the company. In 2021, capacity utilisation stood at 78%.

Unipar said 50% of its sales came from PVC, down from 62% in 2021.

Sales of caustic soda amounted to 37% of the total, up from 26% in 2021, and sales of chlorine and tis derivatives stood at 13% of the revenue, practically unchanged from 2021.

By country, Unipar sales in Brazil in 2022 stood at R5.18bn (71.2% of the total) and at R2.09bn in Argentina, or 28.7% of the total.

Speaking to reporters from the company’s headquarters in Sao Paulo on Tuesday, Unipar’s CFO said 2023 may also be a challenging year for earnings due to the woeful global economic environment.

“Costs for natural gas and ethylene went up sharply in 2022. For 2023, we expect a more challenging year, with more restricted prices and margins, expectations of high inflation globally, and continued economic and political instability in Argentina,” said Antonio Marcos Campos Rabello.

As a big producer with its main operations in Brazil, Unipar welcomed the newly announced hike in import tariffs for some polymers, including PVC, as it will prop up its market share in its domestic market.

The company’s CEO, Mauricio Russomanno, welcomed the protectionist policy arguing the hikes would help the Brazilian chemicals industry compete in a more equal footing with overseas players, given other disadvantages when it comes to the cost of feedstocks or energy.

“This issue is important for us. We have an issue with the competitiveness of our input costs, speaking of natural gas or energy, for example: we are not able to compete on an equal footing [with overseas players],” said Russomanno.

 “Prices for natural gas in Brazil are much higher than in the US, for instance, and this has impacted some of our plants, which have not been as efficient … That is why we need to prepare ourselves to become more competitive [globally].”

He added that Unipar is always “fighting to reduce” its variable costs by eliminating losses and buying raw materials more efficiently.

To fend off the woes coming from Brazil’s slowing economy, Unipar’s CEO said the company is committed to “seek new avenues for growth”, mentioning the possibility to venture into new markets further afield than Brazil and Argentina as well as developing new product lines.


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